San Bernardino County hosts the military's most cherished clubhouse, Ft. Irwin, and several other bases, active and closed. The county population is rich in military denizens, their derelicts, offspring, misfits and buffs. With the consequent prevalence of the classic sociopathy found in these people, predation, exploitation, corruption and virtual tyranny have spread throughout our courts, law enforcement and government. Discuss the disgraceful prison and military industrial complexes here.

2005-12-13

After saying he was “deeply apologetic” for taking bribes while on the Colton City Council, Donald Sanders was sentenced Monday to 17 days in jail and $45,000 in restitution and fines.

“I’ve been ashamed, absolutely been ashamed,” Sanders told U.S. District Judge James V. Selna at the federal courthouse in Santa Ana.

Sanders’ sentencing closes the federal government’s chapter in a wide-ranging corruption probe that began in the late 1990s and ensnared high-ranking city and county officials in San Bernardino County. The last major figure, Orange County businessman William “Shep” McCook, awaits trial on state bribery charges.

“I think you are truly remorseful,” Selna told Sanders as the former councilman’s wife and three children watched. But he added that “breaches of public trust will not be tolerated.”

Sanders will pay $40,000 to the city of Colton and a $5,000 federal fine. His jail sentence begins Friday, though Selna offered to postpone it so Sanders could spend the holidays with his family.

The former councilman received three years’ probation, including five months of home detention, and is allowed to travel only for work. He could have been sentenced to as many as five years in prison.

In addition, Sanders has been ordered to pay more than $66,000 as part of a civil suit that the city of Colton filed against key figures in a billboard scam.

Colton City Manager Daryl Parrish on Monday called the corruption scandal “very traumatic” for the city.

“It shakes you to the marrow when public trust is violated so many times by so many public officials,” he said. “We’re focusing on the future, not on our past.”

Sanders’ attorney, Winston McKesson, said his client’s punishment was fair but argued that Sanders should receive a sentence similar to that of former San Bernardino County administrator James Hlawek, a key player in the corruption scandal who was sentenced to three years’ probation and community service.

Hlawek admitted accepting thousands of dollars in bribes and later helped investigators unveil other corruption schemes, including the one in Colton. He was sentenced last month by U.S. District Judge Christina A. Snyder.

Sanders resigned from the City Council in 2001, shortly after admitting he had accepted cash payments in exchange for supporting a billboard project. In 2003, the case against Sanders and two other players in the billboard scheme was dismissed.

Later that year, Sanders pleaded guilty to one count of conspiracy to commit bribery in connection with a different plot, the charge for which he was sentenced Monday.

Sanders admitted to accepting cash payments to vote in favor of an exclusive contract for Suncrest Homes to market and sell mobile homes at the city-owned Rancho Mediterrania Mobile Home Park.

Suncrest had paid former Colton Mayor Abe Beltran “consulting fees,” some of which he funneled to Sanders, chairman of the city’s redevelopment agency.

Beltran was sentenced to 15 months in prison, and Suncrest general manager Michael L. Berg was sentenced to six months.

Sanders told investigators about other bribery rackets and gave them some of the bribe money he had received to be used as evidence, according to a motion filed by the U.S. attorney’s office. He also made 87 tape recordings of conversations for investigators, the document states.

2005-11-30

James Hlawek, San Bernardino County’s former chief administrative officer, was sentenced this week to three years’ probation and community service for accepting thousands of dollars in bribes in a corruption scandal that roiled the county in the mid-1990s.

Hlawek, who pleaded guilty in 1999 to one count of conspiracy to commit bribery, could have received up to five years in prison. However, prosecutors sought leniency because of Hlawek’s assistance with other cases stemming from the scandal.

“He opened the door that let us in. Because of him, we were able to get inside of the corrupt dealings,” said Assistant U.S. Atty. Edward Moreton Jr.

County officials expressed disappointment with the sentence by U.S. District Judge Christina A. Snyder, which also included 300 hours of community service.

County spokesman David Wert said Hlawek was a central figure in the corruption scandal and that supervisors hoped he would be punished with jail time.

“Every time this is brought up, it casts suspicion on the county,” Wert said.

San Bernardino County has only recently begun to recover from a bribes and kickbacks-for-contracts scheme in the mid-1990s that sullied its reputation.

Hlawek’s predecessor, Harry Mays, was sentenced to two years in prison, and landfill executive Kenneth James Walsh was sentenced to 18 months, as the result of a wide-ranging probe.

In May, the county won $10.6 million in a civil lawsuit against figures in the case, including Mays, Walsh and Hlawek, the county’s chief administrative officer from 1994 to 1998.

Hlawek testified last year that he became involved in the scheme after Mays approached him in the county government center’s cafeteria and said they could receive large bribes by getting a landfill contract for Walsh’s company, Norcal Solid Waste Systems.

Hlawek learned he was under investigation when he was told that the FBI was searching his trash, according to a motion filed by the U.S. attorney’s office. Hlawek later agreed to cooperate with investigators, submitting to “maybe hundreds” of interviews, the document said. He also recorded meetings and conversations with other alleged participants, once traveling to North Carolina to do so.

Officials told the judge Hlawek was twice threatened by people he identified during the investigation.

“If not for defendant’s cooperation, much corruption in San Bernardino County likely would have remained concealed,” the motion said.

Hlawek did not return calls seeking comment. His attorney, John Vandevelde, said his client’s sentence was just.

“If he had gone to jail,” Vandevelde said, “the people who stonewalled and obstructed the case would be laughing, saying that it shows that it’s foolish to come forward.”

2005-11-09

RIVERSIDE ---- One of the developers of the Menifee Lakes Country Club golf course pleaded guilty Wednesday to 10 felony counts, including money laundering and elder abuse, for his part in Riverside County's largest-ever fraud case.

Larre Jaye Schlarmann, 50, of Carlsbad, entered into a plea agreement with prosecutors and received a sentence of 15 years in state prison.

Schlarmann is considered by authorities one of the lesser participants in the Heath & Associates investment fraud scheme that targeted primarily elderly victims.

In July 2004, prosecutors filed a criminal case against Daniel Heath; his father, John Heath; Denis O'Brien; and Schlarmann. The district attorney's office alleges that from the early 1990s until the company was shut down in April 2004, that Heath & Associates defrauded more than 1,400 people out of an estimated $191 million.

Many of the victims invested ---- and lost ---- entire life savings, prosecutors say. Authorities estimate that any money victims may be able to get back will probably be in the neighborhood of 15 cents on the dollar.

The Heaths and O'Brien are scheduled to appear before Judge Gordon Burkhart in Riverside this morning to begin a preliminary hearing that is expected to take about two weeks. Burkhart will then decide whether there is enough evidence against the three to try them.

They are charged with numerous felonies, including selling unqualified securities, abusing elders, violating a court order to stop selling securities, selling securities by misrepresentation, grand theft, burglary and money laundering.

Prosecutors say that Schlarmann was not directly involved in Heath & Associates and did not personally solicit money obtained through the alleged fraud scheme.

He was, however, a partner with Daniel Heath in real estate and other ventures into which Daniel Heath funneled much of the money fraudulently taken from elderly victims, prosecutors say.

Schlarmann's attorney, Michael Lipman, said after Wednesday's hearing that the best way to describe what his client did was money-laundering. "He got money for Heath," Lipman said.

"I don't believe my client put it together in his head that this was nothing more than a Ponzi scheme," Lipman said.

Also known as pyramid schemes, Ponzi schemes are when participants try to make money simply by recruiting others into some sort of investment program. There are typically promises of high returns in a short amount of time just for handing over money and asking the same of others. Initial investors are typically repaid not with actual investments, but with money from new investors.

Deputy District Attorney Michael Quesnel said the lengthy sentence received by Schlarmann sends a message that people involved in fraudulent investment schemes will go to state prison, even if they only aid others who directly defraud victims.

Quesnel said prosecutors spoke to some of the victims of the alleged Heath & Associates scheme when it began to look like Schlarmann would be pleading guilty.

"They were very happy to see him going to state prison," Quesnel said. "Even though he's not the one who looked them in the eyes and lied to them."

As part of his guilty plea at the Hall of Justice in Riverside on Wednesday, Schlarmann gave up all of his personal assets, estimated by prosecutors at $1.2 million, for restitution to the victims.

"This is a good start to getting the victims back some of their money," said Deputy District Attorney Michael Silverman, who is prosecuting the case with Quesnel.

Among the assets seized from Schlarmann were two homes, a couple of Rolex watches and his ownership in dozens of Quizno's restaurants, Silverman said.

The vast majority of his seized assets came from those businesses, which Silverman estimated to be about 40 in the Inland Empire and San Diego County.

Also included in Schlarmann's plea agreement was an order to be part of the joint restitution of $117 million along with any other defendant who is convicted in the case.

Silverman said it is highly unlikely much of that amount will be recovered for the victims, at least as it pertains to Schlarmann's involvement.

"We took everything he had already," the prosecutor said.

During Wednesday's hearing, the judge ordered Schlarmann to swear under oath that he has no material net worth or material assets and that no assets have been hidden or transferred to his family or any third party.

Schlarmann, wearing orange jail clothing and shackled, stood during the hearing and admitted he was guilty to 10 counts. Burkhart carefully went over each of the counts with Schlarmann, who looked over documents, to make sure he understood his guilty pleas.

After that, Silverman told the judge that all remaining counts ---- which surpassed 300 ---- would be dismissed.

By law, Schlarmann must serve half of his 15-year sentence before he can be paroled. He has credit for 745 days in custody.

The Heaths and O'Brien remain in custody, held in lieu of $144 million bail each ---- the largest bail amount ever set for individuals in Riverside County. The amount stems from the initial total loss alleged by prosecutors when the men were arrested.

2005-08-03

Aug. 3, 2005 – A change in federal law proposed by the Pentagon may make it harder for scientists here to share information and work with foreign colleagues.

The proposal calls for more stringent security requirements for facilities that use Defense Department funds and work with foreign researchers. Under the "clarifications of existing responsibilities" registered earlier this month, universities, federally-funded research centers and government contractors would automatically lose Pentagon contracts if they fail to impose stronger regulations on foreign researchers with access to unclassified information and technology that the Department regulates as "export-controlled."

Export-controlled information and technology is sensitive enough to require approval before sharing it with non-citizens, but, the journal Science reports, universities have long-operated free from many of the more restrictive export laws. The exemption comes from a Reagen-era White House directive popularly known as the "fundamental research clause."

The clause allows for basic scientific information to be traded outside of export laws by creating different security classifications. Information and technology that remains unclassified but falls under the export-controlled category has been regularly shared by university-based researchers since the issuance of the 1985 directive, according to university biosecurity handbooks and rules.

University researchers are concerned that bringing "fundamental research" back under export rules will make international collaboration prohibitively difficult, Science reported.

According to an Association of American Universities report released in April, contracts are increasingly including language that restricts the use of foreign researchers and prohibits the publication of findings that may be considered controlled for export purposes, but remains unclassified. The report was conducted with the Council on Government relations.

The Department of Defense published the proposed rule change in the Federal Register earlier this month. The public comment period is open until September 12.

The Securities and Exchange Commission announced that final judgments have been entered by the United States District Court in Los Angeles against the defendants in a $145 million scheme that targeted the elderly. In a complaint filed on April 28, 2004, the Commission alleged that D.W. Heath & Associates, Inc., Private Capital Management, Inc. ("PCM"), Private Collateral Management, Inc., and PCM Fixed Income Fund I, LLC ("PCM Fund"), and two individuals, Daniel William Heath, 48, formerly of Chino Hills, California, and Denis Timothy O'Brien, 50, formerly of Yorba Linda, California, fraudulently induced elderly investors to invest in "secured" notes that paid a "guaranteed" return. The court appointed Robb Evans as permanent receiver over Heath & Associates, PCM, Private Collateral Management, and the PCM Fund.

On March 8, 2005 and May 25, 2005, the District Court entered final judgments of permanent injunction and other relief against O'Brien and Heath, respectively. The judgments enjoin O'Brien and Heath from violating the antifraud provisions of Section 17(a) the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, the securities registration provisions of Section 5(a) and 5(c) of the Securities Act, and the broker-dealer registration provisions of Section 15(a) of the Exchange Act. The judgments order O'Brien to disgorge to the receiver $2,526,157 plus pre-judgment interest of $34,582, and Heath to disgorge to the receiver $106,031,605 plus pre-judgment interest of $3,302,553. O'Brien and Heath consented to the entry of the judgments without admitting or denying the Commission's allegations. On April 4, 2005 and June 24, 2005, the Commission instituted administrative proceedings against O'Brien and Heath, respectively, barring them from association with a broker or dealer based on the entry of final judgments of permanent injunction against them. O'Brien and Heath consented to the entry of the orders without admitting or denying the Commission's findings.

Previously, the District Court entered judgments of permanent injunction and other relief against Heath & Associates, PCM, Private Collateral Management, and the PCM Fund, pursuant to the consent of the receiver. The judgments enjoin the receivership entities from violating the antifraud and securities registration provisions, and specify that pursuant to one or more plans of distribution to be submitted by the receiver to the court, the funds and assets of the receivership estate will be distributed to investors less court-approved fees and expenses.

The final judgment against Heath concludes the Commission's action. Administration of the receivership estate will continue.

In a report to the court, the receiver stated that approximately $144.8 million was raised from investors through PCM and the PCM Fund, and of that amount, approximately $39.6 million in principal and interest was returned to investors. According to the receiver's report, over the life of the company, PCM suffered a net loss of about $41.8 million and earned only $1 million in total income.

On July 1, 2004, the Riverside County District Attorney's Office arrested Heath, O'Brien, John William Heath, formerly of Covina, California, and Larre Jaye Schlarmann, formerly of Carlsbad, California. They have been charged with multiple felony counts, including selling unqualified securities, selling securities by misrepresentation, violating a court order to desist and refrain from selling securities, elder abuse, grand theft, burglary, and money laundering. All four men are in custody awaiting a preliminary hearing. Bail was set at $144 million for each individual. The Riverside DA's Office also obtained asset freezes against Heath, O'Brien, John William Heath, and Schlarmann. Robb Evans was appointed receiver in the criminal action.

The Commission wishes to acknowledge and thank the Riverside County District Attorney's Office for their assistance in this matter.

ORDER INSTITUTINGADMINISTRATIVE PROCEEDINGPURSUANT TO SECTION 15(b)(6) OFTHE SECURITIES EXCHANGE ACT OF1934, MAKING FINDINGS, ANDIMPOSING REMEDIAL SANCTIONSI.The Securities and Exchange Commission (“Commission”) deems it appropriate and in thepublic interest that a public administrative proceeding be, and hereby is, instituted pursuant toSection 15(b)(6) of the Securities Exchange Act of 1934 (“Exchange Act”) against Daniel W.Heath (“Respondent”).II.In anticipation of the institution of this proceeding, Respondent has submitted an Offer ofSettlement (the “Offer”) that the Commission has determined to accept. Solely for the purpose ofthis proceeding and any other proceeding brought by or on behalf of the Commission, or to whichthe Commission is a party, and without admitting or denying the findings herein, except as to theCommission’s jurisdiction over him, the subject matter of this proceeding, and the findingscontained in Section III.2 below, which are admitted, Respondent consents to the entry of thisOrder Instituting Administrative Proceeding Pursuant to Section 15(b)(6) of the SecuritiesExchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (“Order”), as set forthbelow.2III.On the basis of this Order and Respondent’s Offer, the Commission finds that:1. Heath, age 47, resides in Temecula, California and was the president and asenior financial consultant of D.W. Heath & Associates, Inc. (“Heath & Associates”), a Californiacorporation, which acted as an unregistered broker-dealer offering and selling securities in the formof corporate notes of Private Capital Management, Inc. (“PCM”) and the PCM Fixed Income FundI, LLC (“PCM Fund”) (collectively, “PCM Notes”). Respondent has never been registered with theCommission in any capacity.2. On May 25, 2005, a judgment of permanent injunction was entered againstRespondent, pursuant to his consent, enjoining him from future violations of Sections 5(a), 5(c),and 17(a) of the Securities Act of 1933 (“Securities Act”) and Sections 10(b) and 15(a)(1) of theExchange Act and Rule 10b-5 thereunder, in the civil action entitled Securities and ExchangeCommission v. D. W. Heath & Associates, Inc., et al., Civil Action Number CV 04-02949 JFW(Ex), in the United States District Court for the Central District of California.3. The Commission’s first amended complaint alleges that Respondent, actingwith and through Heath & Associates, PCM and the PCM Fund and their sales agents, engaged inthe unregistered offer and sale of at least $69.9 million of PCM notes. The Commission’s firstamended complaint also alleges that Respondent made material misrepresentations to prospectiveinvestors concerning the use of investor proceeds and operated an undisclosed Ponzi scheme. TheCommission’s first amended complaint further alleges that Respondent knowingly failed todisclose to investors commissions received by him and his sales agents.IV.In view of the foregoing, the Commission deems it appropriate and in the public interest toimpose the sanctions specified in Respondent’s Offer.Accordingly, it is hereby ORDERED:Pursuant to Section 15(b)(6) of the Exchange Act, that Respondent be, and hereby is, barredfrom association with any broker or dealer.Any reapplication for association by the Respondent will be subject to the applicable lawsand regulations governing the reentry process, and reentry may be conditioned upon a number offactors, including, but not limited to, the satisfaction of any or all of the following: (a) anydisgorgement ordered against the Respondent, whether or not the Commission has fully or partiallywaived payment of such disgorgement; (b) any arbitration award related to the conduct that servedas the basis for the Commission order; (c) any self-regulatory organization arbitration award to a3customer, whether or not related to the conduct that served as the basis for the Commission order;and (d) any restitution order by a self-regulatory organization, whether or not related to the conductthat served as the basis for the Commission order.By the Commission.Jonathan G. KatzSecretary

2005-06-22

San Bernardino County Supervisor Paul Biane challenged his colleagues Tuesday to take a lie-detector test to determine who was responsible for leaking a memo about settlement talks with a real estate developer.

Calling it a serious breach of confidence, Biane said all five supervisors, their staffs and the county counsel's office should submit to polygraph tests.

"This kind of breach puts the taxpayers' money at risk," he said.

But while the challenge was issued to all of his colleagues, Biane aimed his comments at Supervisor Dennis Hansberger, whom Biane said he suspects of leaking the document.

Last week, Biane was quoted as saying Hansberger should not be a supervisor and deserved to go to jail -- statements he said he still stands behind.

"If I'm wrong, he deserves a retraction," Biane said Tuesday. " At this point, I still believe that to be the truth."

According to the confidential memo obtained by The Press-Enterprise, Biane and board Chairman Bill Postmus on March 25 personally tried to negotiate a settlement with the principals of Colonies Partners, developers of a 434-acre commercial and housing project in Upland, after both sides sent their attorneys out of the room.

About an hour later, they struck a tentative agreement that would have had the county pay Colonies more than $77 million, the memo said. A formal settlement has not been reached.

Last week, Postmus asked District Attorney Mike Ramos to investigate the leak.

Hansberger, who denies leaking the document, said Biane is attempting to distract attention from his own behavior in the settlement talks.

"It strikes me as a desperate act by somebody who feels very threatened," he said.

Hansberger has questioned the appropriateness of Biane and Postmus holding private settlement talks with the developer. He said the district attorney's office also should look into whether any discussions were held outside closed session, in violation of state law.

Although he dismissed lie-detector tests as proving nothing, Hansberger said he would agree to take a test if the investigation was expanded to explore those questions.

Supervisors Postmus, Gary Ovitt and Josie Gonzales all said they would take the tests if asked.

Biane said he would leave it up to the district attorney's investigator whether to expand the investigation.

"My answer to that is I'll answer any question posed to me by the district attorney's office," he said.

Ramos has said that he asked for the investigation to be made a priority and hoped to have some answers by the Fourth of July weekend.

District attorney' spokeswoman Susan Mickey said a decision on requesting polygraph tests would be made by the investigator. She said she could not comment on the investigation and whether polygraph tests would be sought. Mickey said lie-detector tests are not admissible in court.

2005-05-22

All five San Bernardino County supervisors on Tuesday vowed to take lie-detector tests to prove that none of them leaked a confidential memo about a proposed $77-million legal settlement with a Rancho Cucamonga developer.

The pledge is the latest twist in a three-year legal battle between the county and Colonies Partners over which should pay for flood control improvements near a massive residential and commercial development in Upland.

The lawsuit has created a political rift on the Board of Supervisors, where at least three of the five members – Paul Biane, Gary Ovitt and Chairman Bill Postmus – have accepted campaign donations from Colonies or its partners.

Last week, Biane accused fellow Supervisor Dennis Hansberger of leaking the memo about continuing settlement negotiations, which the board had discussed in closed sessions.

Postmus also has asked Dist. Atty. Michael Ramos to investigate the leak.

The April 4 memo, from county attorneys to the supervisors, expressed “serious concerns” about a tentative settlement with Colonies Partners, which Biane and Postmus negotiated for the county.

Under the proposal, which could be accepted only with the board’s approval, the county would pay the developer $55 million as compensation for 37 acres that might be lost to flood control uses, and $22 million for a flood basin system Colonies Partners already has constructed.

The county attorneys’ memo stated that the 37 acres may be worth only about $1 million and, in fact, may not be needed for flood control.

At Tuesday’s board meeting, Biane surprised his colleagues by volunteering to take a “lie detector, polygraph, whatever it takes to get to the bottom” of who leaked the memo. The four other board members quickly offered to take polygraphs as well.

“I have never violated the privilege of closed session and would never violate it,” said Hansberger, who has been critical of the settlement negotiations. He added that prosecutors should expand the probe to all aspects of the negotiations with Colonies Partners.

“I obviously got close to a nerve with somebody,” Hansberger said after the meeting, referring to his criticisms of the negotiations. “Board members don’t normally make suggestions and allegations about other board members

The county has only recently closed key chapters from a scandal in the mid-1990s that sent a former county administrator to prison for accepting bribes and kickbacks. Supervisor Gerald “Jerry” Eaves resigned after pleading guilty last year to corruption, and last month the county won $10.6 million in a civil lawsuit against figures in the case, including two former county administrative officers and a landfill executive.

The D.A.’s public integrity unit, which investigates allegations against public officials, is expected to end its investigation of the leaked memo in the next few weeks.

“It could be a supervisor; it could be a secretary,” said prosecutor Frank Vanella, chief of the unit. “We really don’t know. But we think it’s very serious. This matter was going to be very costly to taxpayers.”

Vanella said he had heard of the supervisors’ offers to take lie detector tests: “I don’t know if we’ll take them up on that.”

In 1997, Colonies Partners bought several hundred acres near the Foothill Freeway in Upland to build about 1,100 homes and a retail center.

Colonies’ dispute with the county is over who should pay for about $22 million in flood-control improvements, to divert runoff from the freeway and flood water from Cucamonga Creek around the Colonies project.

The developer sued in March 2002, contending the county should pay for the flood control basin system and reimburse Colonies for the land required for the system. The developer is asking for as much as $200 million.

A San Bernardino County judge ruled in favor of Colonies in August 2003. But the state 4th District Court of Appeal in Riverside tentatively reversed part of that ruling, finding that the county may have the right to use some of the land required for the flood control project.

Controversy about the negotiations was rekindled after reports that the county had contracted Jim Brulte, former Republican leader of the state Senate, to help the county secure a $10-million grant from the state Department of Water Resources for flood control. Brulte also had done consulting work for Colonies in December and January.

“This was a landowner being hosed illegally by county government,” Brulte said Tuesday.

In May, the county hired his firm, California Strategies Inc., for up to $24,999 – $1 less than what’s required for a board vote. So far, Brulte’s firm has received $15,000.

“The county of San Bernardino came to my firm and asked me to help them,” Brulte said, adding that he saw no conflict in his role in the matter. Brulte was present when the proposed $77-million settlement was discussed between Colonies Partners and the two supervisors.

Colonies Partners and its owners have donated thousands of dollars each to Postmus and Biane’s campaigns in years past and gave Supervisor Ovitt $25,000 in September 2004. Biane, who was a real estate agent before he was elected, had worked with Colonies partner Dan Richards on at least one deal.

I.The Securities and Exchange Commission (“Commission”) deems it appropriate and in thepublic interest that a public administrative proceeding be, and hereby is, instituted pursuant toSection 15(b)(6) of the Securities Exchange Act of 1934 (“Exchange Act”) against Denis TimothyO’Brien (“Respondent”).II.In anticipation of the institution of this proceeding, Respondent has submitted an Offer ofSettlement (the “Offer”) that the Commission has determined to accept. Solely for the purpose ofthis proceeding and any other proceeding brought by or on behalf of the Commission, or to whichthe Commission is a party, and without admitting or denying the findings herein, except as to theCommission’s jurisdiction over him, the subject matter of this proceeding, and the findingscontained in Section III.2 below, which are admitted, Respondent consents to the entry of thisOrder Instituting Administrative Proceeding Pursuant to Section 15(b)(6) of the SecuritiesExchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (“Order”), as set forthbelow.2III.On the basis of this Order and Respondent’s Offer, the Commission finds that:1. O’Brien, age 49, resides in Temecula, California and was a sales agent ofD.W. Heath & Associates, Inc., a California corporation, which acted as an unregistered brokerdealeroffering and selling securities in the form of corporate notes of Private Capital Management,Inc. (“PCM”) and the PCM Fixed Income Fund I, LLC (“PCM Fund”) (collectively, “PCMNotes”). Respondent has never been registered with the Commission in any capacity.2. On March 8, 2005, a judgment of permanent injunction was entered againstRespondent, pursuant to his consent, enjoining him from future violations of Sections 5(a), 5(c),and 17(a) of the Securities Act of 1933 (“Securities Act”) and Sections 10(b) and 15(a)(1) of theExchange Act and Rule 10b-5 thereunder, in the civil action entitled Securities and ExchangeCommission v. D. W. Heath & Associates, Inc., et al., Civil Action Number CV 04-02949 JFW(Ex), in the United States District Court for the Central District of California.3. The Commission’s first amended complaint alleges that Respondent, actingwith and through Heath & Associates, PCM and the PCM Fund engaged in the unregistered offerand sale of at least $69.9 million in PCM Notes. The Commission’s first amended complaint alsoalleges that Respondent made material misrepresentations to prospective investors concerning theuse of investor proceeds and the due diligence he had conducted prior to recommending theinvestment to prospective investors. The Commission’s first amended complaint further allegesthat Respondent knowingly failed to disclose to investors commissions received by him and othersales agents.IV.In view of the foregoing, the Commission deems it appropriate and in the public interest toimpose the sanctions specified in Respondent’s Offer.Accordingly, it is hereby ORDERED:Pursuant to Section 15(b)(6) of the Exchange Act, that Respondent be, and hereby is, barredfrom association with any broker or dealer.Any reapplication for association by the Respondent will be subject to the applicable lawsand regulations governing the reentry process, and reentry may be conditioned upon a number offactors, including, but not limited to, the satisfaction of any or all of the following: (a) anydisgorgement ordered against the Respondent, whether or not the Commission has fully or partiallywaived payment of such disgorgement; (b) any arbitration award related to the conduct that servedas the basis for the Commission order; (c) any self-regulatory organization arbitration award to a3

2005-02-10

Two former San Bernardino County officials and a landfill executive must pay a total of $1.75 million in punitive damages for participating in a scheme to trade bribes and kickbacks for lucrative county contracts, a Ventura County Superior Court judge tentatively ruled Wednesday.

The punitive damages levied against former County Administrative Officer James Hlawek, his county predecessor Harry Mays and former landfill executive Kenneth James Walsh are in addition to $4.5 million in total restitution ordered in December by Superior Court Judge Vincent J. O’Neill Jr.

San Bernardino County officials sought the restitution and punitive damages in a civil lawsuit against the three men and several others who took part in a series of corruption scandals in the mid-1990s. Most of those involved have pleaded guilty to criminal charges and have served time in jail.

The case was moved from San Bernardino County to Ventura because of pretrial publicity. The defendants will be allowed to file written objections to the tentative ruling before O’Neill issues a final judgment.

During the punitive damages phase of the civil trial, lawyers for the county had urged that O’Neill award the county as much as $12 million – or $3 for every dollar Hlawek, Mays and Walsh collected in the corruption scheme.

But in his ruling, O’Neill said he took into consideration the damages already awarded against the three men, among other factors.

Although the judgment is much lower than county officials requested, attorney Michael Sachs said he was pleased with the ruling. He said he thought O’Neill kept the amount low because Hlawek, Mays and Walsh had argued that they couldn’t pay a multimillion judgment.

“It’s still a big chunk of money that these people have to pay,” he said.

An attorney for Mays and Walsh could not be reached for comment Wednesday, but Sachs said he expected the men to appeal.

Hlawek has represented himself in court.

Under the tentative ruling, Mays must pay $1 million; Walsh, $500,000 and Hlawek, $250,000. O’Neill said he ruled on Hlawek’s penalty after taking into consideration his cooperation with investigators.

Hlawek was at the center of a series of corruption schemes that played out in the 1990s. He has pleaded guilty to accepting bribes and kickbacks while holding the county’s top administrative post. Mays and Walsh pleaded guilty in federal court to conspiracy to bribe Hlawek to win county approval for a $150-million waste disposal contract that the county ultimately awarded to Walsh’s San Francisco landfill firm.

Mays has served 18 months in prison and Walsh, 15 months. Hlawek is awaiting sentencing.

2005-01-22

This is a four-year-old Iraqi girl. She’s covered in her parents’ blood. Her parents died when U.S. troops mistook their car for, I guess, insurgents. They weren’t. The Army says it may investigate. Perahps the soldiers were entirely in the wrong. Perhaps they were justified, as the car continued coming toward them. More likely, things transpired in some panicked-stricken fog that hovers between the two.

Let’s put aside for a moment the horror of what happened (and yes, that’s a rather large matter to set aside).

Let’s look at this in purely self-interested terms. What do you suppose is going to become of this little girl? Think she’ll dismiss her dead parents in light of the larger picture, this grand scheme to remap the Middle East? What do you suppose the prospects are, now, that we’ll win her over to our cause? What about her sister, who was also wounded? What about their extended family? Friends? Neighbors? What about moderate Arabs/Muslims who see this image on TV?

I’m sure there are several thousand orphaned boys in Iraq, too. Who’s side do you think they’re on now? Are they more likely to join hands with the uniforms that killed their parents, or the forces who want to kill the uniforms that killed their parents? And it isn’t just them. Orphan one kid, and you turn him against you, as well as his siblings, his cousins, his aunts and uncles, his neighbors, and his friends. Orphan a thousand kids, and you make about 50,000 enemies. Of course, that’s just friends and family. This picture made it to the BBC. We know dozens just like it get aired on Al-Jazeera every day. For every Little Green Footballs weblog that posts pictures of angry Muslims, there’s a dozen Muslim newspapers that publish images like this one (perhaps images like this one will make some of us see a little better how it’s possible to string together a few horrible photos in an intempt to wrongly indict a larger group of people. LGF does it to Muslims. Muslim nespapers do it to the U.S. military). How many new enemies does each picture like this win us? How many new terrorists does each image like this breed?

I’ve written before that I think out troops are on par the most measured, humane, restrained military force in in history. I still think that. I think we do more to avoid collateral damage than can really be reasonably expected of us. We ought to be proud of that. But you know what? It doesn’t matter. Reality isn’t important. Perception is. My point with this picture isn’t “look at how brutal the United States is.” My point is, “what do you think the world’s billion Muslims think when they see this?” What happened before the picture doesn’t matter. What happens after doesn’t matter either. What matters is the picture. Screaming kid. Covered in blood. America killed her parents. For the people who we’re trying to win over, that’s the entire story.

Shit like this is always going to happen in war. No matter how well-intentioned the military waging it. It happens in every war, as do Mi Lais and Abu Ghraibs. It’s not the nature of America or the American military. It’s the nature ofwar. That’s why we’d better be damned sure any war we fight is essential only to defend us from grave, immediate harm, because even if it is all of that, shit’s going to happen to make new people hate us. This one wasn’t, and isn’t any of that. And so we’re breeding a new generation of terrorists. Why? In some farfetched, Kiplingian attempt to convert the unwashed, and centrally plan a liberal society where none has existed for centuries.

This little girl had no reason to hate the United States. Now she has two. So does everyone who knows her, and everyone who has anything in common with her.